Negotiation ABCs and the “Fiscal Cliff”

Susan M. Yates, December 10th, 2012

To those of us who work in ADR and who know something about the negotiations process, the current wrangling in Washington about the “fiscal cliff” is not a surprise. Consider these familiar ABCs that are characteristic of negotiation:

Anchoring

BATNA

Courthouse steps

“Anchoring” is the strategy of initiating negotiations with a position that is very favorable to one’s own interests. Negotiators don’t start with their bottom line. They anchor the negotiations with a position that is as favorable as it can be without poisoning the discussion. Some may argue that the leaders on both sides missed the part about not poisoning the discussion, but they certainly have anchored at positions that are favorable to them.

“BATNA”, or best alternative to negotiated agreement, reminds negotiators to consider what will happen if they do not reach agreement. Political pundits on both sides have argued that letting the automatic changes take place may be the best outcome for their side, at least in the short run. Indeed, as each side looks at this situation strategically, they must consider what would happen if they drove over the fiscal cliff. Similarly, lawyers and their clients weigh their chances in court, and beyond trial, at appeal.

That brings us to “Courthouse Steps.” Judges and lawyers bemoan the cases that settle on the eve of trial – on the courthouse steps – just as the citizenry is bemoaning the ongoing conflict about the fiscal cliff. But cases don’t get settled until there is pressure, often time-pressure, to settle. Indeed, one of the benefits of mediation is that it brings the pressure to settle earlier in the process – usually putting the courthouse steps far before the courthouse. As much as there is hand-wringing in the media because an agreement has not yet been reached regarding the fiscal cliff, mediators are not surprised. We regularly see agreements get worked out at 5:00 after a long day of mediation, or when one party’s lawyer needs to leave for the airport.

Perhaps the next ABC should be “Dance.” In a negotiation, there is a certain dance – an exchange of offers and demands – that is expected. Those who try to short-circuit the dance by starting close to where they want to end or by making large, unreciprocated moves can find themselves shortchanged in the settlement. This concept is related to anchoring, but it continues throughout the negotiation. We see it play out in the fiscal cliff negotiations as each side begins to accept the other’s central demands. Revenue increases and spending decreases are now on the table for both sides.

While this all may look familiar and understandable, that doesn’t mean it is optimal. Some core Getting to Yes principles seem to be left out of the fiscal cliff negotiations. We do not see much “focus on the problem, not the people.” We see “objective criteria” not be very objective. Nonetheless, a little understanding of how negotiation works sheds considerable light on the fiscal cliff process, no matter where one stands on the political spectrum.

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